EUR/USD: Under resistance

KEY GRAPHIC ELEMENTS

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The European currency is still under significant resistance in the short term and under the influence of the candle linked to the intervention of the American central banker, Jerome Powell, last week. The Fed’s hawkish tone remains in the minds of investors who must now take into account that the American central bank may not make as many rate cuts as investors hoped for. Indeed, operators had previously expected nearly four rate cuts in 2025. Jerome Powell indicated that the committee was targeting two rate cuts at this stage. If the remarks of Austan Goolsbee, president of the Federal Reserve of Chicago, last Friday, reassured the stock markets, the currency market has not managed to retrace the decline linked to this announcement. As long as macroeconomic information continues to disappoint in Europe and surprise positively in the United States, the European currency should gradually slide towards parity. No notable statistics should influence forex traders today. In the currency market, investors will keep a close eye on the yen. Indeed, Tokyo’s core consumer price index, which excludes the volatile costs of fresh food, has been released. This increased by 2.4% in December compared to the previous year. This information maintains market expectations for an increase in short-term interest rates from the Bank of Japan. Investors expect the BOJ to raise interest rates to 0.5% by March next year. Forex traders closely monitor Japanese monetary policy and its influence on the yen because operators are exposed to so-called carry trade operations. In the event of a second scenario, as in last August, of a violent shift in the Japanese currency, this could strongly influence the prices of other currencies such as the euro dollar.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is negative in the medium term on the EE (E) parity.

Our entry point is at 1.0413 E. The price target for our bearish scenario is at 1.0238 E. To preserve the invested capital, we advise you to position a protective stop at 1.0453 E.

The expected profitability of this Forex strategy is 175 pips and the risk of loss is 40 pips.

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